Report: US corporate profits in Bermuda ‘646% of Island’s GDP’ – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

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Report: US corporate profits in Bermuda ‘646% of Island’s GDP’

A columnist for the Financial Times has claimed US corporate profits in Bermuda totaled 646 percent of the Island’s GDP.

He wrote that the winner of this year’s US election will be forced to “engage deeply with fiscal issues”- including tax reform.

“Recent political debates, for example, have highlighted loopholes that permit a few to accumulate tens of millions of dollars in a tax-free individual retirement account (IRA) when almost everyone else is constrained by a $2,000 contribution limit,” the FT columnist wrote.

“Can the observation that Ireland, Bermuda and Luxembourg are three of the five jurisdictions where the US corporate sector earned the most profits reflect anything other than rampant tax sheltering?

“Anyone who doubts this should ponder the fact that in 2007, US corporate profits in Bermuda totaled 646 percent of Bermuda’s GDP.

“The treatment of profit incentives paid to investment operators who do not use their own money but simply receive the ‘carry’ as they invest other people’s money is another example of an inappropriate provision.

“These examples, and the many more that could be adduced, are significant not only because of revenue the US Treasury could recoup while also making the tax system fairer. They also point to the power of special interests to shape fundamental aspects of economic policy. Reform could be an important step towards rebuilding confidence in the federal government that is sorely lacking today.”

The FT writer said the more tax issues are discussed during the campaign, “the more the candidates will be driven to make pledges about the things they will never do pledges that might make tax reform that much more difficult.

“So, here is an alternative. Leaders in both parties should commit themselves to the goal of tax reform for growth, fairness and deficit reduction.

“They should acknowledge that every tax expenditure or special break has to be on the table. They should ensure their staffs are compiling a large inventory of options.

“The relevant Congressional committees should take testimony from experts of all persuasions. And then, right after the election, the negotiations should begin.”

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Published February 27, 2012 at 1:00 am (Updated February 27, 2012 at 8:35 am)

Report: US corporate profits in Bermuda ‘646% of Island’s GDP’

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